Celebrities are just like us. Even though they may have bigger estates or more complicated family situations, celebrities still worry about how to create a plan that will provide for their loved ones once they are gone. And, if those plans are not put together well, celebrities’ loved ones could find themselves in a long, drawn-out fight that can tear apart families and tarnish legacies.
Many of us make the same estate planning mistakes that celebrities do, albeit usually out of the spotlight and on a smaller, less dramatic scale. Take this time to reflect on the status of your estate plans and learn the following valuable lessons from celebrity estate planning mistakes:
Have a plan in place.
A will is usually the simplest way to provide for your loved ones after you are gone. If you do nothing else, put together a will using an attorney or a DIY document that has been created by an attorney. If you don’t have any sort of legal documents in place that dictate who you want to receive your assets when you pass away, the state will decide. And this decision process, without a will or any other legal documents to guide the courts, can take years. Because Jimi Hendrix left no will, it took more than 30 years to settle his estate.
Check your plans regularly and make updates if necessary.
Wills and other estate planning documents are not things that you create once and then tuck away for the rest of your life. As your life changes, so will your plans. If you don’t make updates to your estate planning documents, you could end up leaving out important people in your life. For example, when actor Heath Ledger died suddenly, it was discovered that he hadn’t updated his plans to include his daughter, so everything went to his dad. The birth of a child, a marriage, divorce, move, retirement — all of these events may require an update to your plans.
Include all your wishes, including personal requests, in binding legal documents.
A court can’t be sure whether that verbal promise you made to a loved one really happened, or whether it happened more recently than your outdated will or trust. Marlon Brando’s housekeeper alleged that he promised her his house, but there was nothing in his estate plans passing the property on to her. His estate settled with her after years in court. Also, documents that aren’t properly prepared, signed and witnessed won’t hold up in court. For example, Princess Diana wrote a “letter of wishes” that detailed personal items she wanted her godchildren to have when she passed away. Because this was not an official legal document, her executors disputed the wishes.
Rely on professionals for tax and estate planning advice.
When creating your plan for the future, there are certain ways to pass on your assets that can minimize the amount your estate has to pay, along with the amount those who receive your assets will have to pay. The ways the laws are written, for example, exempts spouses from paying estate taxes on any assets passed to them. But what if, like actor Philip Seymour Hoffman, you are not married to your partner? Then the state could end up receiving a fairly hefty chunk of those assets that you wanted to go to your partner. Hoffman could have left the funds directly to his children through a trust controlled by his partner. This would avoid estate taxes and provide for his partner and children. Professionals such as tax advisors and estate planning attorneys will be able to tell you what is best for your estate.
Pick an executor who is unbiased.
Many people tend to pick a family member as the executor of their estate. This is the person who will oversee the distribution of your assets. In tricky family situations, having a family member in that role may lead to increased drama and disagreements about your wishes. Don’t be a Deadhead and follow in the footsteps of Grateful Dead guitarist Jerry Garcia, who named his third wife as executor of his estate. She decided she didn’t want to follow Jerry’s wishes and stopped making payments from Garcia’s estate to his second wife. This led to a long, drawn-out court battle. Your situation may not be quite as complicated, but naming someone who can be unbiased and is not a beneficiary of your estate will ensure that your estate is distributed fairly and according to your wishes.
